Senate panel backs Uniform Commercial Real Estate Receivership Act to consolidate receivership rules

The Senate Industry and Business Committee voted to recommend Senate Bill 2122, which would adopt the Uniform Commercial Real Estate Receivership Act as a new chapter of state law governing commercial real-estate receiverships.

Perrell Grossman, a member of the North Dakota Commission on Uniform Laws, told the committee the act “provides certainty for business owners and creditors. It's fair to all parties. It can preserve and maximize the value of commercial property.” He said the uniform law was adopted by the National Conference of Commissioners in 2015 and that roughly 14 other states have enacted the law or a substantially similar version.

The bill consolidates existing receivership authorities into a single statutory chapter and spells out court powers, standards for appointment, receiver duties, bonding, notice, creditor claims, and procedures for using or selling receivership property. Supporters said the consolidation aims to reduce uncertainty and speed court action when receivers are needed.

Supporters and testimony

Rick Kleberg, president and CEO of the North Dakota Bankers Association, said North Dakota’s receivership framework had changed little for decades and that the bill will create uniformity and predictability for lenders and courts. “Receiverships can be a powerful tool for banks because they are generally cost effective and expedite the sale of assets,” Kleberg said.

Lisa Cruz, commissioner of the Department of Financial Institutions, said the department reviewed the proposal and supports it because clarity in law helps banks and credit unions that operate across state lines.

John Alexander of the Dakota Credit Union Association also testified in support, telling the committee the legislation would fine-tune receivership law and make outcomes more predictable for creditors and other stakeholders.

Key provisions explained to committee

Perrell Grossman walked the committee through the bill’s principal sections. The proposal would create a new chapter (referred to in testimony as chapter 32-10.1) and add a related applicability provision to chapter 32-19.2 so the new receivership chapter governs commercial receiverships rather than the trustee procedures in chapter 32-19.2. Major topics he summarized include: - Definitions aligning with bankruptcy and UCC terminology but leaving some terms open for situational flexibility. - Notice and opportunity for hearing, with limited exceptions for ex parte orders where the court finds it appropriate. - Scope and exclusions: applies to commercial real property and certain related personal property but excludes 1–4 dwelling units unless used commercially and excludes receiverships authorized by government entities acting in a governmental capacity. - Appointment standards (before and after judgment), receiver disqualification rules, bonding requirements and the receiver’s status relative to recording statutes and lien law. - Receiver powers and duties (including limits on transfers outside the ordinary course of business and reporting obligations), procedures for executory contracts and unexpired leases, and protections and immunities for receivers acting within their appointment. - Creditor-claim filing procedures, priority, fee and expense awards from receivership property, and court authority to remove or discharge a receiver.

Committee discussion and vote

Committee members questioned whether the act created new law or simply consolidated existing authorities. Grossman and supporters said the measure primarily consolidates and clarifies law into a single chapter to make administration more efficient and predictable and noted that the Uniform Law Commission vetted the text for many years.

Senator Klein moved a do-pass recommendation and Senator Kessel seconded. The committee recorded the following votes: Senator Pine — Aye; Senator Kessel — Aye; Chairman Vargo — Aye; Vice Chairman Vane — Aye; Senator Endy — Aye. The tally read as a 5–0 do-pass recommendation. The committee identified Senator Klein as the likely carrier to the full Senate.

Why it matters

Proponents said the bill reduces uncertainty for lenders, receivers, property owners and courts by setting consistent appointment standards and enumerating receiver powers and duties; supporters expect the consolidation will reduce litigation over procedural issues and help preserve value of distressed commercial real estate.

What it does not do

Testimony emphasized that the act is limited to commercial property and does not expand receivership powers for government units acting in a governmental capacity. Supporters also noted the court retains discretion over whether to appoint a receiver and which powers to grant in individual cases.

Next steps

With a do-pass recommendation, Senate Bill 2122 moves toward floor consideration; committee members indicated they expect further discussion if the bill reaches the full Senate.